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Dewan Bolakiram and anr. Vs. Lala Dilawar Sahai and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil;Property
CourtKolkata
Decided On
Judge
Reported in(1885)ILR11Cal258
AppellantDewan Bolakiram and anr.
RespondentLala Dilawar Sahai and ors.
Cases ReferredAverall v. Wade.
Excerpt:
mortgagor and mortgagee - priority--marshalling of securities--purchaser for value. - .....the value of the equity of redemption as that would simply amount to making a present of the mortgage-money to the vendee (see section 55 sub-section 1, clause (g), transfer of property act). i am not aware of any later case in which the question has been raised though the point apparently, arose in a subsequent case in calcutta 1 c.w.n. 691: but the report is so obscure that the judgment is of very little use.]* [in view of the fact that dr. rash behari ghosh was the vakil for the unsuccessful appellant in this case, the following criticism of this case, in his book of mortgages (1911) vol. i, may be read with interest:--'the judgment, as reported, which, it may be noted in passing, would go to show that even a puisne mortgagee cannot claim the privilege of marshalling, is founded.....
Judgment:

O'Kinealy and Trevelyan, JJ.

1. This is a suit in which the plaintiffs as mortgagees sue to have it declared that certain properties in possession of the defendants are liable to attachment and sale as the property of their judgment-debtors. The defendants have raised several issues: first, they contend that they are in a position to claim the benefit of a prior mortgage; secondly, they say that, even if that be not the case, still they are entitled to throw the mortgagees on other properties to save the property in their own possession.

2. Now, in regard to the first point, we think that the defendants are not entitled to the benefit of the first security; for there is nothing on the record to show the relative dates of the conveyance and the payment of the money; nor is there any finding by the lower Court that they paid the money to the original mortgagee. * We do not think, therefore, that they have shown they are entitled to take the benefit of the first mortgage.

3. Then, as to the second point, the defendants contend that the plaintiff is not entitled to a declaration that the property is liable to attachment and sale, unless he has shown that he has exhausted the other property.

4. Reliance has been placed on two cases referred to in Story's Equity and Jurisprudence. One is the ease of Hartly v. O'Flaherty L. & G. temp. Plunkett p. 208 : 1 Beat 61. This was a suit to determine whether a mortgagee of a portion of an estate, having paid a Crown debt overriding the entire estate, the mortgagee was entitled to contribution from the purchasers of the other portions. It was not a case of the present kind. In one portion of the judgment, page 216, it is said: ' If a mortgagor sells a portion of his equity of redemption for valuable or good consideration, the entire residue, if undisposed of by him, is applicable in the first instance to the discharge of the mortgage, and in ease of a bond fide purchaser.' This case came under the consideration of the Lord Chancellor in the case of Averall v. Wade L. & G. temp. Sugden p. 252 and there the Lord Chancellor said: 'The general doctrine is this, where one creditor has a demand against two estates, and another demand against one only, the latter is entitled to throw the former on the fund that is not common to them both. This is a narrow doctrine, and cannot generally be enforced against an incumbrancer, who is a mortgagee. Whatever may be the equity of the creditor with only one security, the mortgagee of both estates has a right to compel the debtor to redeem, or he may foreclose. In Ireland, indeed, there would be a decree for sale, and the mortgagee would be entitled to no more than his money, and the Court would deal with the surplus in such manner as it might think fit, so that the equity might be worked out, but not so in England.' So far, therefore, as we can see, there is no support for the contention now put forward that in this suit by a mortgagee we should declare that the mortgagees must proceed against the property not in the hands of the defendants who hold the equity of redemption of a portion only. *

5. We therefore think that the plaintiff is entitled to a decree, and dismiss the appeal with costs.

* [The following criticism of Dr. Rash Behari Ghosh (who was the appellant's vakil) in his Mortgages (1911) Vol. I pp. 498, 499, while of help to understand the judgment, throws additional light on|the facts of the case, the report here not being full on this point:

It will be noticed that the Transfer of Property Act does not expressly provide for oases where the payment of the charge is contemporaneous with the purchase of the equity of redemption. * * * It has, however, been held in a Calcutta case 11 Cal. 258 that the purchaser would not be entitled to the benefit of the prior mortgage in the absence of anything to show that the money was paid by the purchaser himself and not by the vendor out of the purchase-money. I, however, venture to think that this case, in the words of their Lordships of the Privy Council, is likely not to promote justice and equity, but to lead to confusion, to multiplication of documents, to useless technicalities, to expense and to litigation. If an incumbrance is paid out of the purchase-money, can it make any difference whose hand actually pays the money In such cases it is the vendee, I repeat, who redeems and not the vendor, as no sane mortgagor would allow any part of the purchase money to be applied in redeeming an incumbrance, if such money only represents the value of the equity of redemption as that would simply amount to making a present of the mortgage-money to the vendee (see Section 55 Sub-section 1, Clause (g), Transfer of Property Act). I am not aware of any later case in which the question has been raised though the point apparently, arose in a subsequent case in Calcutta 1 C.W.N. 691: but the report is so obscure that the judgment is of very little use.]

* [In view of the fact that Dr. Rash Behari Ghosh was the vakil for the unsuccessful appellant in this case, the following criticism of this case, in his book of Mortgages (1911) Vol. I, may be read with interest:--'The judgment, as reported, which, it may be noted in passing, would go to show that even a puisne mortgagee cannot claim the privilege of marshalling, is founded upon a palpable misapprehension of Lord St. Leonards' dictum in Averall v. Wade. (After citing the extract quoted in this judgment, he proceeds), in other words, you cannot marshal so as to compel the double creditor to divide his claim when he seeks to foreclose the security. If, therefore, two estates are mortgaged to a first mortgagee and one only to the second, and the first mortgagee has the right to foreclose, all that the second mortgagee can do is to redeem him. He cannot compel the first mortgagee to divide his claim. But where the action is for sale and not foreclosure, there can be no question of the mortgagee's dividing his claim, and in countries where the usual decree on a mortgage is sale and not foreclosure, no difficulty has ever been felt in applying the doctrine of marshalling. Indeed Lord St. Leonards is careful to point out that in Ireland, where the mortgagee is not entitled to anything more than his money, the equity of the creditor with only one security may be easily worked out, but, adds his Lordship, not so in England.' p. 362.]


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